Leading article: An unhealthy fix

Fraud is often portrayed as the victimless crime. When a bank loses a few million, it is shareholders' profits that are hit and non-shareholders tend to have little sympathy. Defrauding the NHS falls into a different class. It does not damage profits but the ability of the institution to heal the ill. That makes it a particularly sick crime.

The NHS is not and never has been a wealthy organisation - even after the Chancellor's largesse of recent years. It is now under serious financial pressure and to add to its troubles, the Department of Health estimates £150m a year goes missing in illegal price-fixing by generic drug companies.

The scam is very simple. Pharmaceutical manufacturers enjoy patent protection for their new drug discoveries for 20 years. This allows them to charge a high price for their branded product, without fear of competition, in order to recoup the heavy costs of research and development amounting to hundreds of millions of pounds. The arrangement is subject to much criticism over the level of profits it enables pharmaceutical companies to earn from the NHS. But it is at least legitimate. Once the drug comes off patent, rival manufacturers are free to produce and market generic equivalents of the branded product and compete for sales. Thus the price of generic drugs is expected to fall.

Alas, as Adam Smith observed, "men never gathered together even for a social purpose save to conspire against the public interest". It has been clear for several years that at least some of the manufacturers of generic drugs agreed with one another to sell such commonly used drugs as those prescribed to heart patients to prevent their blood clotting and causing heart attacks - at inflated prices.

In other words, instead of allowing the market to operate by stimulating price competition, they got together and fixed it. Nine individuals and five companies are to be charged with conspiracy to defraud the NHS after the case was referred to the Serious Fraud Office by the NHS Counter Fraud department. All the firms involved have denied any wrong doing. We cannot prejudge the outcome of the case. But it is significant that, as a result of the Department of Health's investigations into price fixing, three companies have already agreed to repay £30m, without admitting liability. That is enough to save around 1,000 of the jobs that hard pressed NHS trusts are currently having to cut in order to balance their books.

Defrauding the public institution on which the nation relies for its health care ought to rank as an exceptionally disgraceful crime. If the defendants are found guilty, their punishment should reflect that.